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Former Tory treasurer Peter Cruddas has accepted a substantial donation to charity in settlement of his libel action over a claim that he was willing to accept an illegal donation to party funds.

The businessman, who resigned as Conservative co-treasurer in March this year, also received an apology and his legal costs from the publishers of The Independent.

His solicitor, Jeremy Clarke-Williams, told Mr Justice Eady at London's High Court today that Mr Cruddas's resignation came on the eve of publication of an article in the Sunday Times, which claimed to recount what he had said at a meeting with two of that paper's reporters posing as potential donors to the party.

Three months later, in June, The Independent published two articles, which referred back to the Sunday Times article and alleged that Scotland Yard had launched an investigation into what in its headline The Independent called the "Tory 'cash for access' affair".

It suggested that, in the meeting which the Sunday Times reporters had taped, Mr Cruddas had shown a willingness to accept a donation of £250,000 and more to Conservative party funds, despite being told that the money would be coming from a Liechtenstein-based fund.

Mr Clarke-Williams said that, as The Independent explicitly reminded its readers, under electoral law it is illegal to accept donations from foreign funds.

The plain implication, therefore, was that Mr Cruddas was guilty, or there were good grounds for assuming him to be guilty, of a serious criminal offence against electoral law.

"It is clear The Independent's articles followed what had been published in the Sunday Times assuming that paper had evidence to back up its allegations. The Independent also quite erroneously appears to have believed that the Metropolitan Police had launched a formal investigation into Mr Cruddas's supposed conduct."

In fact, he added, the Metropolitan Police had done no more than carry out what they called "a proportionate assessment" of the material generated by the Sunday Times.

At the end of that process, the officer in charge wrote to Mr Cruddas on September 3 stating that he had concluded that there was no evidence of any criminal conduct on the part of Mr Cruddas either directly or by implication during the course of the Sunday Times investigation.

Lois Cole-Wilson, counsel for Independent Print Ltd, said they completely accepted, in line with the conclusions of Scotland Yard, that there was no evidence of any criminal conduct on the part of Mr Cruddas, either directly or by implication.

They also acknowledged that at no time was he under formal investigation by the Metropolitan Police.

"Through me, the publishers of The Independent wish to express their very great regret that they gave publicity to these highly damaging allegations, and wish to express their sincere apologies both to Mr Cruddas and to his family for having made them.

"As a token of that sincerity, they will be paying Mr Cruddas's legal costs and making a donation to the Peter Cruddas Foundation, a charity which aims to benefit disadvantaged and disengaged young people in the UK through making grants for charitable work, and through mentoring, business planning and networking."

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